BEIJING - Leaders from Japan and China agreed on Friday to set up a hotline to deepen trust and ties between Asia's two biggest economies and vowed to work together to help the global efforts to curb the financial crisis.

In bilateral meetings ahead of the two-day Asia-Europe Meeting (ASEM) of 27 EU member states and 16 Asian countries, Chinese President Hu Jintao and Premier Wen Jiabao agreed with Japan's outspoken nationalist prime minister that they will promote strategic and mutually beneficial ties.

"Expanding relations between Japan and China will lead to global stability and prosperity," Japanese Prime Minister Taro Aso said in a speech at a ceremony to celebrate the 30th anniversary of a Japan-China peace and friendship treaty.

"I think we can have more confidence in the potential power of the Japan-China relationship and cooperation."

Aso, seen as an outspoken nationalist, and Chinese leaders agreed to set up a hotline between Tokyo and Beijing, where many still harbour resentment over Japan's invasion and occupation of parts of China from 1931 to 1945.

China replaced the United States as Japan's top trade partner in 2007, with two-way trade totalling $236.6 billion, and the two export powers' efforts could be crucial to steadying the world economy.

At the bilateral meetings, leaders from the two neighbours agreed to cooperate on strategies to tackle the financial crisis at a planned summit of global leaders to be held in Washington on Nov. 15.

"The financial system crisis in the United States and Europe is now crossing borders and affecting real economies in other countries," Aso said.

"We will have a G20 summit meeting in Washington and now we have the ASEM summit meeting with European countries, so we discussed the need for both countries to hold hands and work together," Aso told reporters.

Aso came into office with a reputation as an outspoken nationalist, especially wary of China's growing military and economic clout. That has raised fears that under him bilateral relations could deteriorate after a period of warming.

Aso sought to soften his hawkish image and stressed that the two nations were indispensable partners, noting that Japan's trade with China was now 50 times that of 30 years ago.

The Japanese leader, who took office last month after his predecessor abruptly quit, has also in the past offended Seoul with remarks that appeared to try to whitewash Japan's often brutal 1910-1945 colonisation of the Korean peninsula.

Relations with South Korea soured in July after Japan said it would write about a longstanding island dispute in school teaching guides, prompting Seoul to recall its ambassador.

Seoul was reported to have rejected Tokyo's proposal to hold a leaders' summit of Japan, China and South Korea in anger over Japan's renewed territorial claims over the islands.

But at Friday's bilateral talk, Aso and South Korean President Lee Myung-bak focused on how to overcome the global financial crisis through bilateral and regional cooperation and stayed away from politically sensitive issues like disagreements over history and the disputed islands, officials from both countries said.

To fight against the worldwide crisis and discuss issues involving North Korea's nuclear programme, Lee and Chinese leaders supported Aso's proposal to hold a trilateral summit meeting in Japan by the end of this year, they added.

"Japanese Prime Minister Taro Aso invited President Lee Myung-bak to a summit of South Korea, China and Japan to be held in Fukuoka in mid-December," South Korean presidential spokesman Lee Dong-gwan told Korean reporters at a briefing, adding that Lee had accepted the invitation.